11/1/2011

A group of retired U.S. military officers unveiled a new study that is seeking to reenergize the debate over the nation's billion-dollar a day foreign-oil habit.

Unless the United States curtails its consumption of petroleum, these military greybeards caution, any future crisis that disrupts oil supplies could hamstring the nation’s economy and cause global instability.

“We have seen oil shocks before … But at today’s level of U.S. consumption, a sustained disruption would be devastating – crippling our very freedom of movement,” said retired Army Gen. Paul Kern, chairman of the military advisory board of CNA Corp., a government-funded think thank.

In a report released Nov. 1, a group of 13 generals and admirals are calling for "immediate, swift and aggressive action" over the next decade to reduce U.S. oil consumption by 30 percent.

Of nearly 88 million barrels of oil consumed worldwide every day, the United States eats up the biggest share, with 20 million barrels. Slightly more than half of the petroleum the United States consumes comes from foreign countries: Two-thirds from the Middle East, and the rest from Canada and Mexico.

“You could wake up tomorrow morning and hear that the Iranians sense an attack on their nuclear power plants and preemptively take steps to shut off the flow of oil in the Gulf,” retired Marine Corps Gen. James T. Conway says in a CNA news release. “The U.S. would likely view this as a threat to our economy, and we would take action. And there we are, drawn into it.”

Even a small interruption of daily oil supply can have huge ripple effects, the study contends.

Even though just 2 percent of U.S. oil supplies come from Libya, the military campaign there this summer prompted the U.S. Department of Energy to release 30 million barrels of oil from the Strategic Petroleum Reserve.

A larger crisis could disrupt the entire fabric of the U.S. economy, the CNA analysis concludes. If America reduces its current rate of oil consumption by 30 percent and diversifies its fuel sources, the study says, the U.S. economy would be relatively insulated from such upheaval, even in the event of a complete shutdown of a strategic chokepoint like the Strait of Hormuz, the international passageway for 33 percent of the world’s seaborne oil shipments.

The report, titled, “Ensuring America's Freedom of Movement: A National Security Imperative to Reduce U.S. Oil Dependence,” was sponsored by the San Francisco-based Energy Foundation, a partnership of major donors interested in solving the world's energy problems.

CNA analyzed the potential economic impact of a future oil disruption. Under a worst-case scenario 30-day closure of the Strait of Hormuz, the analysis finds that the U.S. would lose nearly $75 billion in GDP. By cutting current levels of U.S. oil dependence by 30 percent, the impact would be nearly zero.

Echoing the Obama administration’s pitch that green energy stimulates the economy, the CNA advisory board’s vice chair, retired Navy Adm. Lee Gunn, says that given today’s high employment, the timing is right to diversify the nation’s energy sources. “Currently, our collective national conscience is focused on jobs, and rightly so,” he says. “But rather than divert us from the task, moving away from oil could contribute to restoring our economic strength.”

The military also could benefit significantly from a 30 percent reduction in U.S. oil consumption, says the report. Achieving such a reduction would spawn diversified power sources other than oil of which the Defense Department could take advantage. Less oil use equals less oil we are required to import and greater flexibility for military presence in dangerous parts of the world. This flexibility could translate into putting fewer American troops in harm's way and keeping more dollars at home.

The report calls on national leaders to take the following steps to reduce U.S. oil demand by 30 percent in 10 years:

• Increase efficiency in the form of more stringent fuel economy standards for cars and trucks.

• Diversify supply, promote the use of a mix of transportation fuels and drive wider public acceptance of these alternatives. Increased domestic production of oil might be useful short-term as long as overall oil consumption is reduced at the same time. Simply replacing foreign with domestic oil without driving down consumption does not reduce national security and economic risks.

• Increase alternative fuels. The study says that a major challenge to the expansion of the use of biofuels in the United States is the lack of sufficient regional collection and production centers and distribution systems.

The retired officers acknowledge that the divisive political environment that currently engulfs Washington is a significant hurdle to achieving these ambitious goals, but they still are optimistic that some elected officials will rise above the partisanship.

“Security must trump ideology,” says Conway in the news release. “You’ve got people stuck in their positions on the left and the right,” he adds. “The nation is at risk because of intransigency.”

Just because national elections are only a year away doesn’t mean action should be put off, says retired Navy Adm. John B. Nathman, a member of the CNA advisory board.

“There’s never a wrong time for facts to be put on the table,” Nathman says in an interview. “We should approach this as a national problem, not as a political problem.”

Dependence on oil has been a highly charged issue since the Nixon administration, he notes. And not much seems to change until there is an oil shock. After each crisis, the nation sinks back into a “trance” mode and fails to take remedial action, says Nathman.

“When we get the next shock we are going to pay a big price,” he says.

But Nathman recognizes that no matter how many studies are published and endorsed by flag officers, the vision laid out in the CNA study will be mostly a “fairy tale” unless Congress embraces a “cohesive national view and a roadmap, as well as legislation.”

According to Department of Energy projections, if there is no sizeable drop in oil consumption, by 2035, the United States still will have to import more than 40 percent of its supply. “We [will] write another report like this in 2035 and say the same thing,” says Nathman. “What we’re suggesting is nothing that nobody has thought of before. But we need to elevate the visibility and the understanding of this problem for the American public,” he says. “We’re not going to get out of this overnight. But we’re still going to be in the shock-and-trance cycle 20 or 30 years from now unless we start acting.”

CNA’s military advisors first drew attention to the nation’s “energy security” problems in 2007. The group was among the first to identify climate change as a national-security issue because of the projected damage of severe weather events. Building on the 2007 report, in 2009 the panel found that the nation’s “approach to energy and our approach to climate change have profound impacts on each other – and both have impacts on our national security.” Later in 2010 published a report that established clear links between the nation’s energy posture, the economy and national security.

Comments

Solydra story is opening a huge can of worms at the DOE LOAN GURANTEE LOAN PROGRAM. Its not just about the Solar loan guarantee program. Look at all the millions in fees collected by the DOE LOAN GUARANTEE PROGRAM with projects 20% completed. Also, an audit needs to be done on DOE GRANTS to individuals from the DOE that are now working in private industry. Very incestuous! There needs to be an audit on each individual loan program for amount funded and results!

The US taxpayer has spent over $2.5 billion dollars over the last 50 years on algae research. To date, nothing has been commercialized by any algae researcher.

The REAL question is: Does the DOE BIOMASS PROGRAM really want the US off of foreign oil or do they want to continue funding more grants for algae research to keep algae researchers employed at universities for another 50 years?

In business, you are not given 50 years to research anything. The problem is in the Congressional Mandate that says the DOE can only use taxpayer monies on algae research, NOT algae production in the US. So far, research has not got the US off of foreign oil for the last 50 years!

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